The porting trap - how likely?

Lennys_Shinpad

Hello,

Our mortgage will be coming up for renewal early next year and I am having a think about what to do with it. We want to buy a larger house sometime but this will not be until 2017 at the earliest.

My preferred option would be to take out a 10 year fixed deal on a 10 year term. That way I would know that the mortgage will be paid off while we're still relatively young provided we meet the monthly payment and don't take out any further borrowing. There are some very good rates out at the moment for our LTV (50%-65% depending on valuation). I was planning on taking out a deal and making sure that it is portable so that we can transfer it when we move to a larger house.

However, I have read quite a few stories about people who have not been allowed to transfer their portable mortgage as they do not meet the bank's new lending criteria. This would be a concern for me as I do not want to be faced with a large early repayment charge. It does seem as though people have been affected by rules that came into force in April 2014 so, assuming we pass the lending criteria early next year and there are no other major changes to our finances, we should be fine to port the mortgage (assuming that banks are not out to get easy repayment charge cash by refusing perfectly good requests).

The papers of course only publish stories about people who have been refused a transfer so I am wondering how much of an issue this is. Any thoughts on this would be greatly appreciated. Also, if this is an issue then I suppose that it does not make sense to take out any fixed term mortgage and instead sit on the SVR until we are ready to move.

Thanks in advance,

Lenny.

amnblog

You are right to be cautious Lenny.

The mortgage will be fully underwritten when you move and there is no way of knowing how the lenders criteria at the time will match your situation.

I would recommend taking a long term fixed product unless you definately intend to stay in the property on which it was originally secured.

Thrugelmir

Lennys_Shinpad wrote: »

However, I have read quite a few stories about people who have not been allowed to transfer their portable mortgage as they do not meet the bank's new lending criteria.

Mortgages are not transferred. Only the mortgage terms are, i.e. the interest rate and the existing product term. When a new property is purchased the new loan required in total has to be fully underwritten. Always been this way. Though underwriting has merely returned to where it was prior to the credit boom and the years of lax lending.

Lenders have to follow regulatory rules and guidance as to manner in which they advance money. These constantly change. In addition they will have target markets for their business. As a consequence it's impossible to say what a particular lender may or may not do several years ahead. Nor in fact if the lender will still be in the mortgage market.